WASHINGTON - The Federal Election Commission said yesterday that advocacy groups that were established to get around fund-raising restrictions in the new campaign finance law may continue to spend unlimited donations for television commercials and other communications, though they must do so under far more restrictive rules.
The commission's ruling on so-called "527 committees" could have profound effects on the 2004 election by helping the Democratic Party, which has been much more aggressive than Republicans in creating these committees to help the party compete with the Republicans' overall 2-1 fund-raising advantage. None of this money winds up in the candidates' hands but can be used to raise issues and attack other candidates by name.
Perhaps the best known of these groups, America Coming Together and MoveOn.org, gained widespread attention when George Soros, the philanthropist and international financier, pledged millions to each. Another organization, called Americans for Jobs, Health Care and Progressive Values, ran television advertisements attacking former Vermont Gov. Howard Dean's presidential bid, showing a close-up of Osama bin Laden and questioning Dean's ability to compete with President Bush on foreign policy. Robert G. Torricelli, the former Democratic senator from New Jersey and a fund-raiser for Sen. John Kerry of Massachusetts, helped finance that organization with $50,000.
The Federal Election Commission took up the matter because Republicans had hoped the commission would curtail the use of unlimited donations, known as soft money contributions, by the committees. The Republican Party objects to the use of the committees because it far outperforms the Democrats in so-called "hard money," which parties raise in smaller increments.
Before the McCain-Feingold bill was passed in 2002, Democrats were more dependent on soft money than Republicans. Preventing 527 committees from using soft money could have solidified the Republicans' advantage.
Democrats say they hope to raise and spend hundreds of millions of dollars through these groups. The committees are required to disclose their donors but the timetable is such that reports are often filed months after financial activity has been concluded.
The question now is whether rather than trying to fight the Democrats, the Republicans will try to fortify their own 527s to match the Democrats. But many campaign finance experts say Republican donors were not as inclined as Democrats to give to third-party organizations.
Some Republicans objected on free speech grounds to their party's drive to prohibit 527s. Bradley Smith, a Republican who is chairman of the Federal Election Commission, said he does not understand the Republican drive to further regulate 527s.
"I'm disappointed that so many people in the party hierarchy feel that this is important," Smith said in an interview yesterday. "It comes at the cost of good law."
In its ruling, the election commission placed some restrictions on the way these committees operate, including a prohibition on certain advertisements paid for solely with soft money.
But Democratic operatives said that, despite this limitation, their committees would continue to be a force in this year's elections. "We'll be plowing forward as planned," said Jim Jordan, a spokesman for America Coming Together, one of the most active 527 organizations. "It's clear that today's action is limited in its scope. We remain confident that we'll have the room we need to operate robustly and effectively."
The commission ruled that these organizations cannot use soft money alone to pay for mail, phone, broadcast or other communications that promote, support, attack or oppose federal candidates. They can, however, use a mixture of hard and soft money to fund communications that mention both federal and nonfederal candidates. Similarly, communications that do not mention a candidate, but make an appeal based on party affiliation or an issue, can be paid for with a mixture of funds.
Charities and some of the 527 committees - those that do not register with the commission and collect hard money contributions - are not covered by the ruling, though they will likely be dealt with when the commission sits to make new rules next month.
The ruling drew a mixed response from political operatives and others who track campaign finance. Watchdog organizations, which supported the McCain-Feingold law and its abolition of soft money, generally applauded the ruling.
"It was a very narrow decision that was made and they made the correct decision," said Fred Wertheimer, president of Democracy 21. "But they left the really big decisions for the rule making."
No halt to soft money
But commissioners in both parties said that the decision is unlikely to keep most 527 groups from using soft money, though it may become more difficult.
"Republicans are dreaming if they think that they are closing Democratic groups out of the game," Smith, the commission chairman, said.
Ellen Weintraub, the commission's Democratic vice chairwoman and the author of the proposal that passed, said the measure was restrictive. But she, too, said that it will not halt organizations from using soft money.
"I don't think it will put anybody out of business," she said. "But it might make business more expensive."